Graeme Thickins on Tech

Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Tag: Minneapolis (Page 4 of 5)

Google Picks Iowa – Goodbye ‘MinneGOOG’

June 21, 2007 / / 6 Comments

It became official a couple days ago: Google has chosen Iowa as a site for a data center, dashing the hopes of us Minnesotans for the Big Guys to come to our state. Oh, the pain of it all! Losing again to the Hawkeyes…. My heart sank when I saw the news on CNet. Another story had appeared earlier, I learned, from my old buddies at Byte & Switch.

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This news was especially painful in light of the post I did a while back, called Minne-GOOG?, in which I related a case that had been made by a fellow Minnesota blogger about why Google should buy the St. Paul Ford plant, which had just announced it was closing.

For a little perspective on this revolting development for Gopher fans, I asked Matt Bauer, the founder of Mosquito Mole Multiworks in Minneapolis, for some background on how such a thing could happen. MMMultiworks specializes in Rails development and hosting for startups. Matt’s a smart guy, and we were just talking about this very subject at lunch the week before this news broke.

“Google’s choice not to build a datacenter in Minnesota doesn’t come as much of a surprise to me,” he said. “This state doesn’t have cheap fiber connections — we’re just a spur off of Chicago for the most part. With its dark-fiber reserves, Google could probably overcome this, but they can’t overcome Minnesota’s energy problem.” He thus hit on the what would appear to be the real reason Google shunned the Gopher state.

“The biggest difficulty in building a datacenter is power — period,” Bauer continued. “That’s why Google buys more land than it needs for its data centers — so no one else can build nearby and take power. Minnesota has a good amount of power, but legislation put into law this February probably likely took Minnesota out of the running.” That legislation requires 25% of the state’s energy to come from next generation power sources. “I’m sure Google saw this and quickly became concerned about the quality of these new power sources and the associated costs. Iowa doesn’t have such legislation and gets its electricity from MidAmerican Energy, which hasn’t raised its prices since 1995. In fact, they’ve promised not to raise prices until 2010! Additionally, their new coal-fueled power plants operate very efficiently and predictably,” said Bauer.

Then there was the take of Ed Kohler, master blogger over at Minnesota’s own Technology Evangelist — the source of that great post I referred to above. He said, “Maybe it’s just there to speed up Warren Buffet’s searches?” Old-Mr.-Money-Bags Buffet lives just across the river from Council Bluffs in Omaha, Nebraska.

Guy Kawasaki Wows Big U of MN Crowd

January 22, 2007 / / 4 Comments

The Minnesota startup community turned out in big numbers on Friday, January 19 to hear Guy Kawasaki deliver his “Art of the Start” presentation. The main room at the McNamara Alumni Center was packed, with some 500-600 people, I’d guess, and a simulcast of the talk had to be set up across the river at the Carlson School for an overflow crowd. I managed to arrive a bit before 11:30 for the meetup I’d called a few days earlier, talked to a few folks (all kinds of people had arrived early), including some of my VC friends and bloggers, then was surprised to learn I was being invited into a special VIP lunch in advance of the talk in an adjoining room. Guylunchtalk Never one to pass up a free lunch, and a chance to talk more informally with Guy, my all-time favorite evangelist and speaker, I seized the moment. And I’m glad I did. Got to chat with Guy, then he gave a real interesting, informal talk and took questions, which was fun. (A photo I include here shows Guy with Gary Smaby, left, and Dan Mallin, sharing some laughs after his lunch talk.)

Guy talked about his love for hockey, and how he actually finds time to play five times a week(!) at his local rink in Silicon Valley. “Maybe I’m a Minnesota guy stuck in a Hawaiian body?” he mused. He also told us about his team, The Capitalist Pigs, which he brought along to compete in the U.S. Pond Hockey Championships at Lake Nokomis, where they’d played their first game at 8:30 that morning. Guy also told us his wife, whom he met at Apple, was originally from Minnesota. (Regarding the hockey tournament, two of the people instrumental in sponsoring Guy’s talk, Dan Mallin and Scott Littman, were also actively involved in that. More on the hockey event later.) Lunchguyk

Since Guy is now a VC, he spoke about his firm Garage Technology Ventures, and explained that he and his partners all have a background in software and IT, so tend to invest primarily in that area, although they have also invested in an e-commerce company and even a “clean-tech” energy firm. The latter is in solar energy and is actually doing the best of any of his portfolio firms right now.

So, What Is It That Silicon Valley Has?
Guy said at lunch that one of the questions he’s asked most often in his travels as he speaks around the country is this: “How do we become like Silicon Valley?” He gave some interesting insights on this topic. First of all, it was really an accident that it happened the way it did, and other locales would have a hard time trying to replicate it. It’s a state of mind, he said, not just a place. The one factor that really makes a difference, Guy said he has learned, is “the quality of the Department of Engineering” at the local university, alluding to the role Stanford University has played in the Silicon Valley phenomenon. “Google was just two engineers with an idea to improve search. Cisco was an engineer who wanted to do routing.” He noted that it’s not so much the business school. “Those people go off to work for the investment banks and big consulting firms. It’s the engineering school you need to focus on.” To me, however, the most insightful comment he had on what makes Silicon Valley different was this: “Investors there have a willingness to lose. They’re not humiliated by losing.” He also pointed out that students and entrepreneurs there come from all over the world. “Nobody cares who your father was, like at the big East Coast schools.” These first-generation entrepeneurs are the ones to watch, he said. “Like the ones whose whole family has been working at the 7-11.” But he also pointed out that a lot of the Silicon Valley allure, and the success of startups there, has to do with luck.

A really fun thing about the lunch is that I got to meet some new Twin Cities-area VIPs and see others I hadn’t seen in years. For example, got to sit next to a guy I’d met early in my career in advertising: Fred Senn, the legendary behind-the-scenes guy at the Fallon Agency, who recently coauthored a great new book called Juicing the Orange. I highly recommend it; Fred described how he and Pat wrote it in a style “as if we were talking to you at a cocktail party.” Also chatted with Lisa Bormaster, publisher of The Business Journal of the Twin Cities, whom I’d emailed with but never met. And I met Doug Johnson of the U of M’s business development office, now called the Office for Technology Commercialization, which really played a big role in pulling off this whole event. Kudos to him and his associate director, Jessica Zeaske, and to all the sponsors. I say it was an off-the-charts success! And I know Guy was very impressed with the size of the crowd. I also know, after hearing more from him a couple days later, that he will be back….

Our Meetup of Local Developers and Bloggers
A lot of my friends turned out to chat beforehand (and after), as I’d encouraged them to in a blog post a week or two prior. After saying hello to Tom Kieffer, Gary Smaby, Jeff Hinck, and Jeff Tollefson, I ran into lots of the great MinneDemo folks — first Dan Grigsby, then I saw Kim Garretson, Tim Elliott, Asim Baig, Luke Francl, Ben Moore, Bruno Bornsztein, Garrick Van Buren, Rob Metcalf, Jeff Pester, and even an old friend from my BestBuy.com days, Jennifer Kemp. [And I may be forgetting a few — sorry. But it was a busy place!] Another contact from days past, Matt Geiser, is now with a software startup called SuperBuild. All told, it was a fun, if brief, get-together. But everyone seemed really stoked by Guy’s talk — which I knew they would be! (The shot I show here is of Bruno Bornsztein and Luke Francl before the event.) Brunoluke

The ‘Art of the Start’ Talk
Guy’s one-hour speech was fantastic, following his tried-and true “top-ten points with a bonus” technique. Rather than me trying to cover all the great insights, I say just get the book! A few of the keys he presented “for starting up anything” are worth mentioning, however. Point number one, of course, is to “Make Meaning” — not money, meaning. Then the money will take care of itself. And we all loved how he went after mission statements in his next point: “Make Mantra.” That means being able to reduce what you do, the difference you make, down to about three or four words, not twenty or thirty. The Dilbert Mission Statement Generator can do the latter (in corporate speak)! You have to deal with the much more important job of coming up with a mantra. Guy’s third point was especially important, I think, to Minnesota entrepreneurs: “Get Going.” What he said here was that you have to “stop looking for a perfect world.” He also said you have to learn to think differently, and that it’s actually good if you “polarize people…all great products and services do.” (The Mac being one prime example from Guy’s past.) And “find a few soul-mates.” A few is good, he said — because “you must balance off each other, and learn how to prop each other up when you need to.” What I really found fascinating about the admonition to “Get Going” was that it was a great follow-on to Dan Mallin’s announcement of a new initiative in his brief talk before introducing Guy. Getgomnlogo It’s called GetGoMN.com. Click that link now and sign up now to get notified when it launches! (soon) I personally am very excited about this initiative…

And Then It Was Off to Hockey
After some good conversation in the networking that followed the event, the next thing on my agenda was to drive over to Lake Nokomis and shoot some pix of Guy playing hockey! He had mentioned previously at lunch that I could shoot some with his camera, too. So, off I went, only to discover I’d run out of battery! By the time I made a stop to correct that, I arrived too late to catch Guy’s 3:30 game. But I manged to get to his next one, at 9:30 Saturday morning, and took a bunch of shots at that one — starting with the shot you see here. Guyatrink I uploaded several more shots to this Flickr set. And I got to shoot with Guy’s great Nikon camera, too — the coolest digital cam I’ve ever held! Two cameras hangin’ around my neck, and my fingers freezin’! (The wind chill was below zero.) I told him I just pointed and shot as fast as I could — hail mary, baby! Hey, shooting hockey action is not easy! I have a whole new respect for those sports photographers. But, like a monkey at a keyboard, sooner or later, I figured if I just kept shooting, something lucky might happen…. 🙂 Anyway, Guy told me later he liked the photos (or at least tried to make me feel good by saying that!), so maybe we’ll see some of the ones I shot with his camera show up on his blog.

I know Guy had a great time here (and he did get a chance to take in both a Gopher and Wild hockey game with his teammates over the weekend). His appearance was a really great thing for our startup community, and I know the energy of the whole experience will carry on for a long, long time. Thanks, Guy, from all of us here in Minnesota! (Update: he just said in an email, “It was an honor and a pleasure!”)

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Gary Smaby: VC Turns Artist

November 22, 2006 / / 2 Comments

I don’t know too many people as remarkable as Gary Smaby. And he proved it again last night. More than 100 of Gary’s friends were invited to an artist’s reception to kick off the showing of his art at the Douglas-Baker Gallery in downtown Minneapolis.
Garysmabyshowcard It’s a project, I learned, that Gary’s been actively engaged in for about two years now. Gorgeous, striking work…as you can see.

The story of Gary’s career goes like this: he basically spent his 20s as an entrepreneur, his 30s as a technology analyst (starting with Piper Jaffray) and supercomputer consultant, his 40s as a VC, and in his 50s, he’s continued as a VC and also become an academic of sorts — and, yes, now an artist. As I said, remarkable. I’ve known him since 1982, respect him highly, and continue to be amazed at his talents.

The story of how he became an artist is really not so surprising when you read the story on his blog. He had some remarkable parents, too, and his mother was an artist.

In his VC life, Gary is part of Minneapolis-based Quatris Fund. Lately, he’s also been serving as VC-in-Residence at the Carlson School of Management’s Ventures Enterprise MBA program at the University of Minnesota. You can read more about Gary here in his bio. He’s shown in my first photo taken last evening explaining the techniques he uses in his print making.

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Congratulations, Gary. You give VCs a good name! I would love to hang one of those beauties in my house — soon as my next venture pays off, that is… 🙂

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Flyspy: ‘Consumers Take Charge’

November 17, 2006 / / 2 Comments

That’s how conference producer and host Phil Wolf, CEO of PhocusWright, described this next session at the the Travel 2.0 conference. He said it was one of the sessions he was most looking forward to, and also said it could be called “reverse yield management,” which I found fascinating. No doubt about it, Web 2.0 and Travel 2.0 fans, airfare search has entered a whole new phase.

One of the main reasons I trekked to Hollywood this week to cover the conference was to hear Minneapolis-based Flyspy do its first sneak-peak pitch — a limited coming-out, as it were, within its chosen vertical. Whatisflyspyslide Robert Metcalf, the founder and visionary behind chart-based Flyspy, was invited a few weeks ago by the event’s producers to introduce his service at this high-profile annual gathering of online and traditional travel execs. He told me he had to think about it for a while, but ultimately decided, even though it’s still early (the site isn’t quite in full beta release yet), that it was just too tempting an opportunity to miss — to get the kind of reaction he could get here.

Robert Metcalf is a very experienced software architect and developer of complex web sites. [He’s shown on the right in the onstage photo.] He describes Flyspy, which he’s been planning and developing very quietly for almost three years now, as the hardest problem he’s ever tackled. “The way airfare data works, it’s just a very, very complex system. When I got into it, I couldn’t believe it.” But now he feels all the hard work is paying off. He describes Flyspy as an “intelligent, at-a-glance airfare search engine.” [See sample Flyspy chart, which illustrates the frequent peaks and valleys of airline pricing, and just how volatile certain routes can be.] He said his main benefit is a “dramatic reduction in fare search time” because of his unique charting approach. The site provides actual, real-time flight data, not historical or predictive data as two other well-funded startups do (and to whom he says he’s often erroneously compared). That would be FareCompare and Farecast, respectively — firms that were also invited to speak in this session (though mysteriously the latter didn’t show). Another key difference I learned with these two sites compared to Flyspy: you can’t actually book a ticket at either.

Though in limited alpha mode, Flyspy has already been discovered and reported on this year by TechCrunch, Wired.com, and Fast Company, and others, and I’ve written about it here previously myself. “It just seems to resonate with people,” says Robert. You can find links to previous coverage at Flypsy’s “About” page.

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Robert says that Flyspy’s approach provides “market clarity and market transparency,” resulting in “high customer confidence.” What he’s learned from a significant amount of feedback he’s already received from his site’s users is that searching and booking on Flyspy eliminates buyer’s remorse. “We allow the consumer to really understand the market for trips they’re planning and their various options. And that results in a positive transaction instead of a negative one.” In other words, it takes away that nagging, uncertain feeling we’ve all had: “If only I’d had more time to search, I know I could’ve found a better fare.” Time is the valuable commodity today, and Flyspy addresses that consumer need head-on, he says.

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Flyspy’s Value Proposition
In his presentation, Metcalf said decision-making time is much faster and search much simpler with Flyspy than with all the other sites — whether you’re comparing to the old-line “Travel 1.0” sites (often called The Big Three), the airline sites themselves, or the newer so-called Travel 1.5 “meta search” sites. I guess that makes Flyspy a genuine Travel 2.0-era search site. Metcalf said Flyspy requires only one search, not many, to get the full picture — which is a major time differential. The number of data points on one of his charts would require 240 searches elsewhere. And Flyspy has the “most Google-like interface” of all the airfare search sites, he says. It’s really dead simple for the consumer.

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Partners Lining Up Before Launch
Toward the end of his talk, Metcalf took the opportunity to announce that Flyspy has several partnerships in place, even before the company officially launches. Well, he didn’t actually name who they are — just hinted broadly. These strategic relationships include:

1) A leading business magazine, where Flyspy will be a regular feature in the travel section of their web site
2) A frequent flyer web site with 15 million page views/month
3) A leading blog platform with 50,000 blogs and 18 million visitors/month
4) A leading online CRM solution with 500,000 users, where Flyspy will be the sole travel partner
5) A major daily newspaper (circulation 600,000) wherein Flyspy charts will be featured weekly
6) An industry publication with a monthly circulation of 80,000

After this session, I grabbed a shot of airline pricing transparency expert Nelson Granados (left) with Robert Metcalf. Nelson is an associate professor at Pepperdine University, where Flyspy is a case study this semester in two of his MBA classes. He previously held a similar position at the Carlson School of Management at the University of Minnesota, and has also worked for Northwest Airlines.

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In my interview with Robert Metcalf at lunch following the session, I learned he was approached at the conference by several firms that are interested in licensing Flyspy’s data, and also by at least one major, brand-name site that would like to feature Flyspy as its exclusive airfare search partner. “I’m very glad I came to the event,” he said. “I met a lot of great contacts and intend to follow up.”

Watch for another post soon recapping this high-energy conference. As I learned here, travel is the world’s largest industry. But the latest iteration of the Internet seems to be breathing new fire into it…

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Rich Karlgaard on ‘Net Disruption and Forbes

October 1, 2006 / / 0 Comments

Switching back to the event I attended this past Thursday evening, the RAIN Makers Conference, I wanted to pass along some of the insightful remarks made in the dinner keynote by my friend Richkarlgaardheadshot_2 Rich Karlgaard of Forbes. [Or as Guy Kawasaki, another friend and business partner, calls him, “Brother Rich.”]

“Since 2001, the global economy has added the equivalent of the whole U.S. economy,” Rich said, as he opened his talk with reference to macro trends. But, though the fundamentals are good, experts don’t agree that it’s a good economy, he said. And, when experts differ so much, something is up. “That something is we’re living in the greatest period of business model change — ever! Companies can come out of nowhere and knock out big players,” Karlgaard said. He referred to what McKinsey & Company calls the “topple rate” of established industry leaders, which tripled over a 20-year period according to their research. Rainmakersconf_1 One industry where this is happening is newspapers, with the stock of the New York Times, for example, at half what it was in 2002. Why is the industry in trouble? “Craig’s List is one reason,” he said, “a company with 23 employees.” He noted that McKinsey said the topple rate will triple again, and he gave some reasons why this volatility will stay with us. “The backside of Moore’s Law is the part that’s important. As performance increases, prices drop 30% a year. Suddenly, hundreds of millions more people can afford technology every year.” He also cited the example of Google bootstrapping its way early on, with the founders not taking equity investment but instead maxing out their credit cards.

Another reason is that the Internet is an amazing price arbitrage system. “Today, what two students can do on the ‘Net is more than what 10 analysts could do ten years ago. Now, anybody can determine what your margins are and come in well under your prices — maybe even 10% of them. Anyone can pick up your skirt.” Karlgaard gave an example of a 17-year-old kid he wrote about in his column recently who did such a thing and grossed $400,000 over three months, just by putting together a virtual team. He talked to his worldwide team members by phone only twice, doing everything else by email or IM. “Just another example,” Rich said, “of the Cheap Revolution at work.”

A final reason he said we’ll continue to see volatility is the amount of capital available. “Forbes even took capital recently — from Elevation Partners, where Bono is a partner!” Bono Read more about that in this Reuters story. [Another Elevation partner is Roger MacNamee, who has a rock band of his own: The Flying Other Brothers. Hey, I got the t-shirt! Right from Roger a few years ago…] Just how much money is out there? Rich laid it out: “About $1.5 trillion in risk capital is sloshing around looking to cause havoc. And about a half trillion of that is in the U.S. We’ll have volatility up the kazoo — get used to it.”

“What does all this have to do with you?” he asked the primarily Midwest audience of angels and business owners. “Well, cost becomes important.” He gave the example of companies such as Intel and HP that are lucky enough to have sales of $700,000 per employee — which may sound impressive, but it’s still not enough for these employees to really afford to live in Silicon Valley. “Now, Google, at $1.4 million in revenues per employee — they can!” His point: “The cost gap between the Valley and rural America is bigger than ever. But the knowledge gap isn’t.” Media access is not a problem anywhere, either, he pointed out — citing how it was much, much different when he grew up in Bismarck, ND. “All this portends well for a heartland revival,” Karlgaard said. “It’s a great time to be a nimble, small private company in a small or midsized town.” The macro trends favor disruption, he said. And the role of the U.S. in the global economy is “systems integrator to the world.”

How the Internet Is Affecting Forbes
Karlgaard also related some very interesting numbers about his employer, in addition to the recent equity investment by Elevation Partners. The surprising stats to many will be the growth metrics of Forbes.com. Forbescomlogo “It’s growing at 70% year-over-year, and will have more ad revenue than the magazine by the end of 2007.” He said that’s what got Elevation Partners interested. “In the media business, as revenues double, valuation triples.” Forbes has very definitely become a global franchise. It’s seeing most of its growth on the Internet, and most of that growth is non-U.S. “But we’ll never give up on the magazine,” he said.

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